nep-tra New Economics Papers
on Transition Economics
Issue of 2016‒07‒09
25 papers chosen by
J. David Brown
United States Census Bureau

  1. Anticorruption and Growth: Evidence from China By Qu, Guangjun; Sylwester, Kevin; Wang, Feng
  2. Rebound effect of improved energy efficiency for different energy types: A general equilibrium analysis for China By Yingying Lu; Yu Liu; Meifang Zhou
  3. Internal Sources of Financing Companies on the Basis of Static and Dynamic Indicators: Comparative Analysis By Pavlović, Radica; Bukvić, Rajko; Gajić, Aleksandar
  4. Firm-Level Evidence on the Cooperative Innovation Strategies in Russian Manufacturing By Vitaliy Roud; Valeriya Vlasova
  5. What User-Innovators Do that Others Don’T: A Study of Daily Practices By Konstantin Fursov; Alena Nefedova; Thomas Thurner
  6. Creativity pays off. Innovation, innovation strategy, and internationalization By Tomasz Brodzicki; Dorota Ciolek
  7. Saving and Bequest in China: An Analysis of Intergenerational Exchange. By Almås, Ingvild; Freddi, Eleonora; Thøgersen, Øystein
  8. Reserve requirements and optimal Chinese stabilization policy By Chang, Chun; Liu, Zheng; Spiegel, Mark M.; Zhang, Jingyi
  9. Stock market integration and diversification possibilities during financial crises: Evidence from Balkan countries By Zdravkovski, Aleksandar
  10. A routine transition? Causes and consequences of the changing content of jobs in Central and Eastern Europe By Roma Keister; Piotr
  11. Agglomeration and Technological Spillovers: Firm-Level Evidence from China's Electric Apparatus Industry By He, Ming; Chen, Yang; Schramm, Ronald M.
  12. Willingness to Pay for Clean Air: Evidence from Air Purifier Markets in China By Koichiro Ito; Shuang Zhang
  13. Patients’ contributions as a quid pro quo for community’s supports? Evidence from Vietnamese co-location clusters By Quan-Hoang Vuong; Ha Nguyen
  14. Trade in environmental goods and sustainable development: What are we learning from the transition economies’ experience? By Natalia Zugravu-Soilita
  15. Valuing Air Quality Using Happiness Data: The Case of China By Zhang, Xin; Zhang, Xiaobo; Chen, Xi
  16. Parental Unemployment and Child Health in China By Pieters, Janneke; Rawlings, Samantha
  17. 'Domestic or Foreign Currency? Remittances and the Composition of Deposits and Loans' By Salvatore Capasso; Kyriakos C. Neanidis
  18. Does Return Migration Affect Health Outcomes in Macedonia? By Petreski, Marjan
  19. Determinants of depositors’ behaviour: Heterogeneous panel estimates By Mammadova, Aytan; Mammadova, Leyla; Mammadov, Fuad; Yusifzade, Leyla
  20. Total Public Debt Sustainability: Empirical Assessment of the Solvency Issue in the Case of the Kyrgyz Republic By Moldokanov Daniiar
  21. Government spending effectiveness and the quality of fiscal institutions By Garayeva, Aygun; Tahirova, Gulzar
  22. Ability tracking and social capital in China's rural secondary school system By Fan Li; Prashant Loyalka; Hongmei Yi; Yaojiang Shi; Natalie Johnson; Scott Rozelle
  23. Transactional approach in assessment of operational performance of companies in transport infrastructure By Dubrovsky, Valery; Yaroshevich, Natalya; Kuzmin, Evgeny
  24. Fiscal Policy Rection and Sustainability of Fiscal Policy in Ukraine By Vdovychenko Artem
  25. Microsimulation of impacts of tax and transfer in Viet Nam By Duong Anh Nguyen; Minh Binh Tran; Anh Mai Le

  1. By: Qu, Guangjun; Sylwester, Kevin; Wang, Feng
    Abstract: Many studies have examined corruption’s effect upon economic growth. This study takes a different approach and investigates whether anticorruption campaigns might also lower economic growth, at least in the short run. We focus upon the anticorruption campaigns run by the Communist Party of China in recent years. To measure the intensity of the Party’s anticorruption efforts, we count the number of articles from official newspapers that discuss corruption or anticorruption policies. These official Chinese newspapers are controlled by the Party as its mouthpieces and the inclusion of articles and editorials in these papers only appear with official approval. Therefore, the frequency of corruption and anticorruption articles within these papers provides information for how seriously the Party views corruption and how strenuously the Party is fighting it. We first analyze the patterns of the anticorruption campaigns across provinces and over time while also comparing our measure with other measures of corruption and anticorruption. Using data from Chinese provinces, we then estimate the effect of anticorruption upon economic growth. We employ fixed effects models and find a negative effect from anticorruption upon economic growth. Concerned that economic growth could impact the intensity of anticorruption campaigns, we utilize dynamic GMM estimation methodologies and also propose an external instrument for our anticorruption proxy. Results remained robust. Finally, we measure the effects of anticorruption not by our newspaper proxies but by looking at growth effects during and after the sentencing of high ranking government officials on corruption charges. Economic growth is once again found to be lower. Moreover, this negative effect appears to last for two years. Our findings do not imply that governments should not try to lower corruption, but do suggest a cost of doing so.
    Keywords: Anticorruption; Official Newspapers; China; Corruption; Growth
    JEL: H11 K42 O11 O43
    Date: 2016–03–02
  2. By: Yingying Lu; Yu Liu; Meifang Zhou
    Abstract: This paper explores the rebound effect of different energy types in China based on a static computable general equilibrium model. A one-off 5% energy efficiency improvement of using five different types of energy is imposed, respectively, in all the 135 production sectors in China. The rebound effect is measured both on the production level and on the economy-wide level by each type of energy. The results show that improving energy efficiency of using electricity has the largest positive impact on GDP among the five energy types. Inter-fuel substitutability does not affect the macroeconomic results significantly, but long-run impact is usually greater than the short-run impact. For those exports-oriented sectors, the capital-intensive sectors get big negative shock in the short run while the labor-intensive sectors get hurt in the long run. There is no “backfire” effect; however, improving efficiency of using electricity can cause negative rebound, which implies that improving the energy efficiency of using electricity might be a good policy choice under China’s current energy structure. In general, macro-level rebound is larger than production-level rebound. Primary energy goods show larger rebound effect than secondary energy goods. In addition, the paper points out that the policy makers in China should look at the rebound effect in the long term rather in the short term. The energy efficiency policy would still be a good and effective policy choice for energy conservation in China who has small inter-fuel substitution in that higher inter-fuel substitution may lead to larger rebound effect.
    Keywords: Rebound Effect, Energy Efficiency Policy, China, CGE Model
    JEL: Q43 Q48 C68
    Date: 2016–06
  3. By: Pavlović, Radica; Bukvić, Rajko; Gajić, Aleksandar
    Abstract: The Republic of Serbia is characterized by unsatisfactory macroeconomic environment (high degree of illiquidity, high inflation rate, rising unemployment, decline in the level of capacity utilization, followed by the process of globalization, deregulation and liberalization of the market with all its negative connotations to the growth and development of our country). Under such conditions where there is a shortage of liquid assets the financial capital has moved from the real to the financial sector, which led companies to over-indebtedness and shutdown of their own capacities. Therefore, capital investments largely depend on internal sources of financing and the ability of companies to internally generate funds for investments. In this regard emphasis is placed on the difference in the assessment of the investment ability of companies based on internal sources of financing measured using static and dynamic indicators in order to prove the necessity of applying dynamic coefficients which unfortunately are not present in our domestic practice.
    Keywords: dynamic analysis, investments, financing
    JEL: G17 G31 G32 M40
    Date: 2015
  4. By: Vitaliy Roud (National Research University Higher School of Economics); Valeriya Vlasova (National Research University Higher School of Economics)
    Abstract: This paper focuses on revealing the heterogeneous impact of firms’ specificities and the environment on the sophistication of the cooperative innovation strategies. We use the firm-level data on innovation strategies of over 1200 manufacturing enterprises in Russia to model the networking strategy as a simultaneous choice of the range of cooperative linkages (within and beyond the value chain and knowledge production sectors). The determinants comprise the internal factors (as absorptive capacity) and the external conditions (e.g. technological opportunities, appropriability and competition regimes). Revealed effects prove the initial heterogeneity hypothesis thus challenging the wide-spread simplified perception of ‘openness’ of the innovation strategy as a one-dimensional characteristic
    Keywords: Innovation cooperation; open innovation; firm-level; Russia; manufacturing; innovation strategy; multivariate probit.
    JEL: L2 O3
    Date: 2016
  5. By: Konstantin Fursov (National Research University Higher School of Economics); Alena Nefedova (National Research University Higher School of Economics); Thomas Thurner (National Research University Higher School of Economics)
    Abstract: This paper argues that innovation behavior roots in specific socio-psychological set-ups that crystallize in daily practices and routines. The latter are easy to observe and have great potential for the identification of user-innovation behavior. We study the practices and routines of Russian user-innovators around media consumption, internet and technology-usage, consumer preferences and civic engagement in comparison with a sample of mere users. The derived model correctly classified 73% of the original grouped cases of user-innovators. We conclude that a set of practices relative to the economic, social and cultural background explains user-innovation engagement and how support could be provided. Although some of our findings are probably specific to Russia, the results are encouraging for further research into the importance of practices and routines in identifying user-innovators.
    Keywords: User innovation; consumer innovation; community innovation; innovation behavior; daily practices; Russia
    JEL: A14 L2 O31
    Date: 2016
  6. By: Tomasz Brodzicki (University of Gdansk, Faculty of Economics; Institute for Development, Sopot); Dorota Ciolek (University of Gdansk, Faculty of Management, Department of Econometrics, Sopot, Poland; Institute for Development, Sopot, Poland;)
    Abstract: A lot of recent empirical research points to the superior performance of exporting firms in comparison to non-exporters. Exporters on average are found to be larger, more productive, more capital and skilled-intensive than non-exporters At the same time, innovation and exporting seem to be inextricably linked at firm-level. Apart from several recent studies, the literature on it for Poland is scarce. This paper analyses the relationship between innovation behaviour, declared innovation strategy and internationalization in a panel of firms from Poland from an extensive survey conducted by the Institute for Development. The results support the idea that the superior performance of the exporters is linked to a large extent to their superior innovation performance. Exporters prove to be more focused on innovations, are more aware of the need to implement changes, and are better prepared to introduce them in reality. They are more probable to be creative and are more likely to behave in a more strategic manner assuming the position of a market leader. We positively identify critical linkages between the declared innovation strategy and export states of Polish companies. Utilizing the classification of Hobday, Rush & Bessant (2004) and controlling for the significance of innovation (firm or market) level, we show that innovatively passive firms have, ceteris paribus, a significantly lower probability of obtaining exporter status. The introduction of innovations at ad hoc manner has a positive however statistically insignificant effect. Only permanent innovators or creative firms enjoy a clear and robust increase in their exporting probability potential. It simply pays off to be innovative. At the same time, our results support the postulates by Altomonte et al. (2013), on the close connection between innovation and internationalization extents.
    Keywords: Innovation, Innovation strategy; Internationalization; Trade; Firms survey; Logit modelling
    JEL: F14 C83 C21 D22 L25
    Date: 2016–06
  7. By: Almås, Ingvild (Stockholm University and NHH); Freddi, Eleonora (Stockholm School of Economics); Thøgersen, Øystein (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Particularly high saving rates among the elderly in both rural and urban China call for an investigation of the involved bequest motive. Utilizing unique survey data from a diverse group of Chinese households, we document that the magnitude of the bequest from parent to child is synchronized with the level of personal assistance from child to parent. Moreover, both bequest and assistance are increasing in the parent's income and decreasing in the child's income. Comparing with the prediction from a stylized overlapping generations model, these ndings are consistent with an exchange-based bequest motive. This conclusion has implications for how public policies and transfer schemes may be designed in order to contribute to the government objective of increased private consumption. Our results indicate that an important driver for our result is the housing wealth as part of the bequest.
    Keywords: equest; intergenerational exchange; housing wealth; Chinese saving.
    JEL: D14 D64 E21
    Date: 2016–06–27
  8. By: Chang, Chun (Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University); Liu, Zheng (Federal Reserve Bank of San Francisco); Spiegel, Mark M. (Federal Reserve Bank of San Francisco); Zhang, Jingyi (Shanghai Advanced Institute, Shanghai Jiao Tong University)
    Abstract: We build a two-sector DSGE model of the Chinese economy to study the role of reserve requirement policy for capital reallocation and business cycle stabilization. In the model, state-owned enterprises (SOEs) have lower average productivity than private firms, but they have superior access to bank loans because of government guarantees. Private firms rely on “shadow” bank financing. Commercial banks are subject to reserve requirement regulations but shadow banks are not. Our framework implies a tradeoff for reserve requirement policy: Increasing the required reserve ratio acts as a tax on SOE activity and reallocates resources to private firms, raising aggregate productivity. This reallocation is supported by empirical evidence. However, raising reserve requirements also increases the incidence of costly SOE failures. Under our calibration, reserve requirement policy can be complementary to interest rate policy for stabilizing macro fluctuations and improving welfare.
    JEL: D81 E21 P31
    Date: 2016–06–09
  9. By: Zdravkovski, Aleksandar
    Abstract: This paper investigates the short- and long-term linkage among the Macedonian, Croatian, Slovenian, Serbian, and Bulgarian equity markets during the period of 4 October 2005 to 31 December 2015. In order to assess the impact of the recent financial crises on the interconnection among the examined Balkan stock markets, the studied period is segmented into pre-, during, and post-crisis period. Johansen cointegration test finds no evidence of cointegration during the pre- and post-crisis periods. However, during the latest financial crises, the empirical findings support the existence of three cointegration vectors. This means that the recent global financial crisis and the subsequent euro crisis strengthened the connection between the investigated stock markets, thus decreasing the diversification possibilities that can be acquired in these markets. Furthermore, innovation accounting analysis reveals that during periods of financial turmoil, the Macedonian stock market is positively and actively influenced by the Croatian and Serbian markets. A significant implication of these results is that the integration between Balkan stock markets tends to alter over time, particularly during stages of financial disturbances.
    Keywords: Balkan stock markets, Diversification, Financial crises, Cointegration, Innovation accounting
    JEL: C51 G01 G11 G15
    Date: 2016–06–23
  10. By: Roma Keister; Piotr
    Abstract: In this paper, we study the shift from manual to cognitive work in 10 economies of Central and Eastern Europe. We highlight the growth in the non-routine cognitive component of jobs, but pay particular attention to the increase in routine cognitive tasks, a trend that is pronounced in the CEE economies but absent in the most advanced economies. We show that workforce upgrading and structural change were the main factors behind the increase in all cognitive tasks, but that the growth in routine cognitive tasks is partly attributable to rising shares of routine-intensive occupations. We identify two groups of workers whose jobs depend most on performing routine cognitive tasks: middle-skilled men in the manufacturing sectors and middle-skilled women in the service sectors, who jointly represent 33% of workers in CEE. We find that robust employment and wage growth among routine cognitive workers has so far prevented job polarisation in CEE. However, the relative prices of routine cognitive tasks are already higher than those of other tasks. If the prices of routine cognitive tasks rise further while technological progress continues, routine intensive employment may gradually decline. We conclude with the policy implications of our findings.
    Keywords: task content of jobs, routinisation, job polarisation, Central and Eastern Europe
    JEL: I25 J21 J23 J24
    Date: 2016–06
  11. By: He, Ming (Division of Economics, Xi'an Jiaotong-Liverpool University); Chen, Yang (Division of Economics, Xi'an Jiaotong-Liverpool University); Schramm, Ronald M. (Division of Economics, Xi'an Jiaotong-Liverpool University)
    Abstract: We use a spatial autoregressive model to study the determinants of firm-level productivity growth using longitudinal data on China's electric apparatus industry over the period of 1999-2007. Factors considered include technological spillover, R&D and export behavior, agglomeration economies, and public expenditure. We propose modifications to Kelejian and Prucha's (1998) FE-2SLS procedure and Mutl and Pfaffermayr's (2011) RE-FG2SLS procedure to cope with the technical difficulties with our unbalanced panel. Statistical evidence strongly favors the fixed effects model over the random effects model. According to our estimates, there are large and signiffcant technological spillovers among firms. Individually, firms benefit from their own R&D and export activities. Market competition and public expenditure in the local and neighboring jurisdictions are found to be important determinants to productivity. Our model also provides direct evidence that the technological spillover effects attenuate rapidly in spatial distance. Finally, the inter-regional spillover effects are found to be more pronounced and more significant on urban districts or jurisdictions with smaller geographical areas. Geographic proximity to neighbors and special administrative role jointly contribute to this observation.
    Date: 2016–03–03
  12. By: Koichiro Ito; Shuang Zhang
    Abstract: We develop a framework to estimate willingness to pay (WTP) for clean air from defensive investment. Applying this framework to product-by-store level scanner data on air purifier sales in China, we provide among the first revealed preference estimates of WTP for clean air in developing countries. A spatial discontinuity in air pollution created by the Huai River heating policy enables us to analyze household responses to long-run exposure to pollution. Our model allows heterogeneity in preference parameters to investigate potential heterogeneity in WTP among households. We show that our estimates provide important policy implications for optimal environmental regulation.
    JEL: L0 Q0 Q5 Q51 Q52 Q53 Q56 Q58
    Date: 2016–06
  13. By: Quan-Hoang Vuong; Ha Nguyen
    Abstract: This paper studies the emerging societal phenomenon of voluntarily co-located patients communities, by examining a data set containing 336 responses from four such co-location clusters in Hanoi, Vietnam. The analysis successfully models the data employing the baseline category logits framework. The results obtained from the analysis show that patients co-living in these clusters contribute their resources (financial and in-kind) in hope of community's supports during their medical treatments. They also contribute voluntary services and share information/experiences with the community, with different beliefs on expected outcome with respect to their possible benefits provided by their communities. Patients value the business community's supports––a reflection of better awareness of corporate social responsibilities––higher, and are more skeptical toward expected benefits from the public health system. The results represent one of first attempts in understanding this special type of somewhat isolated circles of desperate patients who have been excluded from Vietnam's fast-growing emerging market economy.
    Keywords: Health behavior; co-located patients community
    JEL: I12 I19
    Date: 2016–06–22
  14. By: Natalia Zugravu-Soilita (CEMOTEV, Université de Versailles Saint-Quentin-en-Yvelines)
    Abstract: We investigate the causal effects of trade intensity in environmental goods (EGs) on air and water pollution by treating trade, environmental policy and income as endogenous. We estimate a system of reduced-form, simultaneous equations on extensive data, from 1995 to 2003, for transition economies that include Central and Eastern Europe and the Commonwealth of Independent States. Our empirical results suggest that although trade intensity in EGs (pooled list) reduces CO? emissions mainly through an indirect income effect, it increases water pollution because the income-induced effect does not offset the direct harmful scale-composition effect. No significant effect is found for SO2 emissions with respect to the list of aggregated EGs. In addition to diverging effects across pollutants, we show that results are sensitive to EGs’ classification: e.g., cleaner technologies and products, end-of-pipe products, environmentally preferable products, etc. For instance, a double profit—environmental and economic—is found only for “cleaner technologies and products” in the models explaining greenhouse gases emissions. Interesting findings are discussed for imports and exports of various classifications of EGs. Overall, we cannot support global and uniform trade liberalization for EGs in a sustainable development perspective. Regional or bilateral trade agreements taking into account the states’ priorities could act as building blocks towards a global, sequentially achieved liberalization of EGs.
    Keywords: trade liberalization, environmental goods, environmental policy, pollution, transition countries
    JEL: F13 F14 F18 Q56
    Date: 2016–05
  15. By: Zhang, Xin (Peking University); Zhang, Xiaobo (Peking University); Chen, Xi (Yale University)
    Abstract: This paper estimates the monetary value of cutting PM2.5, a dominant source of air pollution in China. By matching hedonic happiness in a nationally representative survey with daily air quality data according to exact dates and locations of interviews in China, we are able to estimate the relationship between local concentration of particulate matter and individual happiness. By holding happiness constant, we calculate the tradeoff between the reduction in particulate matter and income, essentially a happiness-based measure of willingness-to-pay for mitigating air pollution. We find that people on average are willing to pay ¥539 ($88, or 3.8% of annual household per capita income) for a 1 μg/m3 reduction in PM2.5 per year per person.
    Keywords: willingness to pay, hedonic happiness, air pollution, China
    JEL: Q51 Q53 I31
    Date: 2016–06
  16. By: Pieters, Janneke (Wageningen University); Rawlings, Samantha (University of Reading)
    Abstract: This paper studies the causal effect of maternal and paternal unemployment on child health in China, analyzing panel data for the period 1997-2004, when the country underwent economic reforms leading to massive layoffs. We find that paternal unemployment reduces child health, while maternal unemployment has beneficial child health impacts. Analysis of channels shows that paternal and maternal unemployment have different effects on income, time use, mothers' blood pressure, and certain health investments, including children's diets. Our results support the notion that traditional gender roles can explain why mothers and fathers' unemployment affect child health so differently.
    Keywords: child health, unemployment, nutrition, China
    JEL: I12 J13 J69 O15
    Date: 2016–06
  17. By: Salvatore Capasso; Kyriakos C. Neanidis
    Abstract: This paper investigates the effects of remittance receipts on the currency composition of deposits and loans in the home-country banking system. For this objective, we first develop a simple model that links remittance flows to the decisions of households and firms with regard to the optimal share of deposits and loans, respectively, held in the form of foreign currency. We, then, examine empirically the relevance of the theoretical predictions for fourteen Central and Eastern European countries over the last two decades. Both the theoretical and empirical findings underpin the importance of remittances for the currency composition of bank’s balance sheets, pointing to a mismatch between deposits and loans: remittances raise the share of foreign currency loans whilst they reduce the share of foreign currency deposits.
    Date: 2016
  18. By: Petreski, Marjan
    Abstract: The objective of the paper is twofold: i) to investigate if living and working abroad has a meaningful role to play for the health of the return migrant; and ii) to understand if there are any spillovers of return-migrant member onto health conditions of the family members left behind. To that end, we use the DoTM Migration Survey 2009, as well a propensity score matching to address selectivity on observables and IV for the selectivity on unobservables. We also pursue interviews to contextualize the return migration – health nexus. Results suggest that when equalized on observables, return migrants have better health than non-migrants. Though, the reverse causality channel (less healthy individuals are more inclined to return) works to attenuate the true effect of return migration on health. Results further suggest a positive spillover effect of return migration on the health of the family members left behind, being mainly driven by the work of remittances sent while abroad, and not the returned wealth or the health knowledge transfer.
    Keywords: return migration, health, Macedonia
    JEL: F22 I19
    Date: 2016–05
  19. By: Mammadova, Aytan; Mammadova, Leyla; Mammadov, Fuad; Yusifzade, Leyla
    Abstract: This paper empirically evaluates determinants of depositors’ behaviour in Azerbaijan. The response of depositors to macroeconomic, alternative investment and bank specific shocks is analysed by implementing recently developed panel time series methods that are robust to regional heterogeneity and inter-dependencies. We consider that macroeconomic and alternative investment factors are initially exogenous to the banking system and hit all banks simultaneously. Using a monthly panel dataset of Azerbaijan from January 2009 to June 2015, the paper provides new evidence regarding the importance of relationship between deposits and macroeconomic factors, specifically currency risk. The paper highlights the role of currency risk, as a determinant of depositors’ behaviour and conclude that its role overshadow the importance of alternative investment and bank specific factors in Azerbaijan. Despite of wide variation in response of depositors to macroeconomic, alternative investment and bank specific shocks, overall, depositors seem more responsive to risks than previous literature have recognized.
    Keywords: depositors’ behavior, macroeconomic risks, devaluation, official reserves, house price, deposit interest rate
    JEL: C33 G21 G28
    Date: 2016–02
  20. By: Moldokanov Daniiar
    Abstract: The paper analyses the total public debt of the Kyrgyz Republic in terms of solvency criterion. The recent development of total public debt to GDP ratios, as well as sharp increase of fiscal deficit, increases the attention of international investors to the issue of total public debt sustainability of the Kyrgyz Republic. Different methodologies in order to assess whether the country satisfies solvency criterion of the sustainability was implemented including the debt stabilizing primary balance over/under-borrowing test and the stress test. The main finding of the paper is that the total public debt to GDP ratio in the Kyrgyz Republic is under the moderate risk of debt distress.
    JEL: H63
    Date: 2016–04–13
  21. By: Garayeva, Aygun; Tahirova, Gulzar
    Abstract: The cyclical behaviors of government spending and output are investigated for the time period 1996-2013, in the sample of 45 countries divided between 3 groups of countries – Western European, Eastern European and CIS countries – with each one of these groups representing a different development stage. Panel data fixed effects model was used for estimation purposes. In developed countries the main determinant of government spending effectiveness is found to be institutional quality, but access to financial markets is more pronounced in developing countries.
    Keywords: fiscal policy, procyclicality, institutional quality, panel data, fixed effects
    JEL: D73 E02 E32 E62
    Date: 2016–06
  22. By: Fan Li; Prashant Loyalka; Hongmei Yi; Yaojiang Shi; Natalie Johnson; Scott Rozelle
    Abstract: The goal of this paper is describe and analyze the relationship between ability tracking and student social capital, in the context of poor students in developing countries. Drawing on the results from a longitudinal study among 1,436 poor students across 132 schools in rural China, we find a significant lack of interpersonal trust and confidence in public institutions among poor rural young adults. We also find that there is a strong correlation between ability tracking during junior high school and levels of social capital. The disparities might serve to further widen the gap between the relatively privileged students who are staying in school and the less privileged students who are dropping out of school. This result suggests that making high school accessible to more students would improve social capital in the general population.
    Keywords: ability tracking, social capital, interpersonal trust, confidence in public institutions, rural secondary schooling
    Date: 2016–06
  23. By: Dubrovsky, Valery; Yaroshevich, Natalya; Kuzmin, Evgeny
    Abstract: Purpose: Offer an alternative method to assess operational performance of companies in transport infrastructure of a region by making a comparison between transaction costs. The method is supposed to be a cross-functional and possibly applied to an analysis of economic entities of a different order (country, region, sector, companies) while evaluating “viscosity” / complexity of the outside and the inside. Design/methodology/approach: The paper includes an analysis of various methodological approaches to assess a development level of the transport infrastructure in a region. Within the author's approach and for purposed of the research, an index of transaction capacity or the transactionalness index is proposed, which determines a level of transaction costs calculated against the cost of production and revenue. The approach is piloted using the region-wise consolidated financial data of companies involved in the Russian transport infrastructure for 2005/2013. Findings: The proposed alternative way to measure corporate operating efficiency has proved its academic consistency. A specific comparison between the transaction costs using the transactionalness index allows first to identify companies or regions/sectors, where there is excess complexity of economical communication in bargaining. Secondly, the index does not only point out indirectly to a degree of development in the institutional environment, but also the infrastructure (the transport one in the example given). Third, the transactionalness level may say of uncertainty and risks. As an addition to theoretical and methodological aspects of transaction costs, the authors justify an approach to their size estimation, as well as their differentiation dividing them into two groups: those of a natural type and a background type. In a course of their discussion, the authors have concluded that there are such transaction costs in place, which are standard in a manner of speaking. Originality/value: There is a discussion whether it is scientifically reasonable to use an index of transactionalness. There are reasons for applicability of the alternative approach to assess operational performance of companies in transport infrastructure as an indicative criterion of favouring external conditions to execute exchange transactions. According to the authors, a high level of transactionalness is associated with a low development level of transport infrastructure in a region. This says that their competitiveness is specifically less.
    Keywords: transactionalness, transport infrastructure, transaction costs, performance of transport infrastructure
    JEL: D23 L91
    Date: 2016–03
  24. By: Vdovychenko Artem
    Abstract: This article analyzes fiscal policy reaction function with switching regimes for Ukraine. We demonstrate that the fiscal policy reaction function in Ukraine has a nonlinear nature. The analysis revealed that the fiscal policy of Ukraine has been in a passive regime for a long time and a switch to this mode took place in late 2006 with the beginning of rapid economic growth. By means of the LSTR models, it is shown that at high levels of debt and the GDP gap the fiscal policy switches to an active regime. However, such switching is rare and short, and therefore does not have an impact on the overall picture. We also found an asymmetry in the response of fiscal policy on the GDP gap depending on the phase of the economic cycle. In our opinion, this asymmetry is the main obstacle to switching the fiscal policy in active regime.
    JEL: E62 H62 H63
    Date: 2016–06–21
  25. By: Duong Anh Nguyen; Minh Binh Tran; Anh Mai Le
    Abstract: Abstract: This paper assesses the feasibility of simulating the distributional impacts produced by various tax and transfer instruments in Viet Nam. Viet Nam.s system of tax and transfer policies underwent frequent changes, in terms of diversity and adjustment scope. The most important source of data is the Viet Nam Household Living Standards Survey. Investigation of the survey data shows the wide-ranging feasibility of simulating tax and benefit instruments, though more details are available for transfer instruments. The microsimulation should thus focus more on the transfer instruments, which invites interests from a range of government agencies, international organizations, and non-governmental organizations.
    Keywords: microsimulation, tax, transfer, distributional impact, Viet Nam
    Date: 2016

This nep-tra issue is ©2016 by J. David Brown. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.